European and Asian stock markets traded mixed Thursday as investors assessed the outlook for the global AI-fuelled rally, Federal Reserve interest rates and the US government shutdown.
News that Israel and Hamas had agreed to the first phase of a Gaza ceasefire dampened oil price and defence stocks while gold, seen as a safe haven investment, retreated one day after hitting an all-time high above $4,000 an ounce.
The dollar firmed against main rivals.
“Risk sentiment remains high, US stocks closed at record highs on Wednesday, as traders continue to dismiss fears of a bubble in the AI trade,” noted Kathleen Brooks, research director at XTB trading group.
Technology firms have been riding to ever-higher levels this year — dragging equity markets with them as companies pump hundreds of billions of dollars into all things linked to artificial intelligence.
But there is growing concern that the returns may not match the investment sums, leading to warnings that valuations may have gone too far.
“AI is clearly a bubble,” warned Neil Wilson at Saxo markets. “The question is when — not if — it blows up. And timing is incredibly hard.”
Global politics was another main focus for traders Thursday.
Israel and Hamas have agreed a Gaza ceasefire deal to free the remaining living hostages, in a major step towards ending a war that has killed tens of thousands of people and unleashed a humanitarian catastrophe.
In Asia, the Tokyo stock market closed up 1.8 percent after business-friendly Sanae Takaichi recently became leader of Japan’s ruling party.
Paris rose slightly in midday deals as French President Emmanuel Macron races to find a new prime minister after the resignation of Sebastien Lecornu tipped the country deeper into political crisis.
In the United States, Republicans and Democrats appeared no closer to reaching a deal to reopen the government as the row goes into a second week.
Democrats voted for a sixth time to block a Republican stopgap funding measure to reopen government departments.
Democrats refuse to back any funding bill that does not offer an extension of expiring health care subsidies for 24 million people.
Minutes from the Fed’s latest interest-rate meeting meanwhile showed divisions among policy makers over cutting borrowing costs.
On the corporate front, shares in HSBC slid in London and Hong Kong after the global banking giant said it planned to buy the remaining 27 percent of its subsidiary Hang Seng Bank for around US$14 billion.
– Key figures at around 1045 GMT –
London – FTSE 100: DOWN 0.4 percent at 9,515.19 points
Paris – CAC 40: UP 0.2 percent at 8,077.35
Frankfurt – DAX: UP 0.3 percent at 24,664.56
Tokyo – Nikkei 225: UP 1.8 percent at 48,580.44 (close)
Hong Kong – Hang Seng Index: DOWN 0.3 percent at 26,752.59 (close)
Shanghai – Composite: UP 1.3 percent at 3,933.97 (close)
New York – Dow: FLAT at 46,601.78 (close)
Euro/dollar: DOWN at $1.1616 from $1.1628 on Wednesday
Pound/dollar: DOWN at $1.3379 from $1.3401
Dollar/yen: UP at 152.72 yen from 152.64 yen
Euro/pound: UP at 86.84 pence from 86.78 pence
Brent North Sea Crude: DOWN 0.5 percent at $65.90 per barrel
West Texas Intermediate: DOWN 0.6 percent at $62.18 per barrel
